Food truck tax filing obligations to the Federal government and dates that food truck taxes are due are typically based on the legal structure (we’ll cover the two most used in the mobile food industry) you’ve selected for your food truck business and whether you use a calendar or fiscal year. Today we’ll cover some basic information on food truck tax timing and food truck business write-offs for those not yet familiar with them.
Food Truck Tax Basics: Business Structures
If you’re a sole proprietor, every year you must file Schedule C with your Form 1040 to report your business’s net profit and loss. You also must file Schedule SE with your 1040. If you’re a calendar-year taxpayer, your tax filing date is April 15. Fiscal-year taxpayers must file their returns no later than the 15th day of the fourth month after the end of their tax year.
You must also make estimated tax payments if you expect to owe at least $1,000 in federal tax after subtracting your withholding and credits, and if your withholding will be less than the smaller of 90 percent of the tax to be shown on your current year tax return or 100 percent of your previous year’s tax liability.
Partnerships and limited liability companies (LLCs)
Food trucks set up with these structures must file Form 1065 that reports income and loss. The partnership must furnish copies of Schedule K–1, which is part of Form 1065, to the partners or LLC members by the filing date for Form 1065. The due dates are the same as those for sole proprietors.
Food Truck Tax Basics: Tax Deductible Expenses
According to the IRS, the operating costs of running your food truck business are deductible if they’re “ordinary and necessary.” The IRS has their own definitions of “ordinary and necessary” so make sure you study them before defining them yourself.
Food truck owners can fully deduct from taxable income a limited amount of the cost of new business equipment in a year rather than depreciating the cost over several years. Need a new grill or range for your food truck kitchen, get it, but write it off.
Some common food truck tax expenses you can take a deduction include advertising expenses, employee benefit programs, insurance, legal and professional services, telephone and utilities costs, rent, office supplies, employee wages and membership dues to industry associations.
Since you use a vehicle for your mobile food business, the IRS allows you to either deduct your actual food truck tax related expenses or claim the standard mileage rate, which is a specified amount of money you can deduct for each business mile you drive. For food truck tax purposes, be sure to keep a log of the miles you put on your truck, as well as the costs of parking fees and tolls, because you can deduct these expenses.
While most food truck vendors stay in their local area most of the year, you can deduct ordinary and necessary expenses you incur while traveling for your food truck business. Your records need show the amount of each expense for items such as transportation, meals and lodging. Be sure to record the date of departure and return for each trip, the number of days you spent on business, the name of the city, and the business reason for the travel or the business benefits you expect to achieve (trade show, conference, meeting new suppliers).
We hope this helps the new food truck vendors out there when you start looking into setting up for the food truck tax season. If you aren’t comfortable with doing your taxes yourself, make sure to hire an accountant familiar with taxes for foodservice businesses.
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Please Note: This website has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before engaging in any transaction.